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ADGM RA: 21 June 2023
The Registration Authority (RA) of Abu Dhabi Global Market (ADGM) has taken enforcement actions against ADGM-registered companies HSQ Holdings Ltd (HSQ) and PL1 Holdings Ltd (PL1), and their ultimate beneficial owner and director Mr. Mohammed Wasim Nazir, by imposing financial penalties amounting to USD 144,000 for exceeding the scope of their Special Purpose Vehicle (SPV) licence, contravening ADGM’s companies regulations administered by the RA and providing false information to the RA.
HSQ and PL1 were registered by the RA in 2019 to carry out the business activities of an (SPV) which is a passive entity and not an operational one. However, the RA found that both HSQ and PL1 exceeded the scope of their ADGM (SPV) licence by acting as managers of two residential investment properties located in the UAE.
In 2021, Mr. Nazir as the director of HSQ and PL1 filed applications to voluntarily strike the companies’ names off the RA’s register. Mr. Nazir as part of the applications knowingly provided false information to the RA, claiming that the companies did not have any liabilities or prospective liabilities even though there were ongoing claims and disputes with the investment properties’ apartment owners.
Further, the RA found that PL1 continued conducting business after submission of the voluntary strike-off application to the RA which is a contravention of ADGM’s companies regulations administered by the RA.
In 2022, the RA commenced an investigation into the conduct of Mr. Nazir, HSQ and PL1. As part of the investigation, the RA required Mr. Nazir to provide specified information and documents that the RA considered relevant to the investigation. The RA found that Mr. Nazir concealed material information and documents in response to the RA requirement notices.
Accordingly, the RA imposed the following financial penalties:
The fines imposed reflect the seriousness of the several contraventions committed by Mr. Nazir, HSQ and PL1. ADGM-registered companies and directors must commit to performing business activities within the permitted scope of commercial licence, cooperate with investigators and act with integrity when dealing with clients or investors.
Hamad Sayah Al Mazrouei, Chief Executive Officer of the Registration Authority at ADGM, said, “In line with the RA’s regulatory objectives, it is essential for the RA to take appropriate enforcement actions against companies and individuals that are responsible for misconduct. The fines imposed on Mr. Nazir demonstrate the RA’s intolerance to the misconduct of concealing relevant information and documents during lawful investigations. The RA expects complete transparency from registered directors, especially during the course of its investigations. ADGM-registered companies must also reflect the true scope of their commercial licence to prospective clients or investors to protect their interests and to ensure that the integrity of ADGM is protected.
Copies of the Final Notices setting out full details of the matter can be found in the RA Regulatory Actions section of ADGM’s website.
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